Are Google And Yahoo on The Wrong Side of History in China?

Bruce Nussbaum

There is a wonderful story in the Washington Post Sunday morning--The Click That Broke a Government's Grip--that gives an hour-by-hour timeline to how Li Datong, a senior editor at the China Youth Daily, beat the Chinese government's propaganda bureaucracy using text messaging, blogs, websites and an unusual amount of personal courage. The article illustrates how the internet is having an enormous impact on political discourse and the ability of the Chinese Communist Party to control news and society at large.

It shows in great detail how the fight for freedom is being waged today--and why such innovation giants as Google and Yahoo may be on the wrong side of history in China. I don't know the people who run Yahoo but I have met with the founders of Google and they are intensely focussed on the ethical issues of doing business in China. Yet good intentions aren't enough and may not be forgiven in years to come by those in China who are struggling to gain the kind of freedoms that are core to American values. Yahoo, especially, cannot be in a position of giving up information that leads to the arrest of freedom-fighters.

It is a strange twist of fate to see Google, Yahoo, Cisco and Microsoft caught in this tangle web of the web. Yet enmeshed they are and they simply must find a way to be on the right side of history. Google does disclose when the government is blocking links on its search engine in China. Yahoo doesn't. Google does not host email and blogging in China. Yahoo's servers are in China and it has provided user data to the police that appears to have resulted in arrests.

There are important lessons here for all corporations doing business in China. The authoritarianism that makes it so much easier and more profitable to do business there than, say India, comes at a price. There is a strong poltical movement within the creative class inside China fighting for more freedom. Being on the opposite side of that creative class may eventually prove to be very costly to corporations.

Paradoxically, China needs just what the freedom fighters are demanding. There are tens of thousands of protests in China every year against land-grabs and tax policy that involve government bureaucrats and communist party hacks hurting rural peasants in the name of economic growth and progress. Preventing this unrest is the stated policy of the ruling elite of the Communist Party in Beijing. But without a free press, these issues cannot be aired, discussed and remedied. The very effort to control unrest breeds unrest.

It would do Yahoo, Google, Cisco and Microsoft good in Washington and inside China to disclose their contracts with the Chinese government and make their actions transparent.

There are more stories in the WP on The Great Firewall of China on Monday and Tuesday.

Before it's here, it's on the Bloomberg Terminal.